(Delivered in Parliament on 6 August 2019)
Mr Deputy Speaker sir, the Point-to-Point Transport Sector Bill regulates both taxi and ride-hailing industry operators, treating them as a single point-to-point transport sector. Notable provisions include the requirement for all providers to be licensed and the prohibition of driver exclusivity arrangements. On the whole, the provisions of this Bill are a step in the right direction and I do not oppose the Bill. I have a few clarifications to seek and suggestions to make.
Firstly, my colleague Mr Dennis Tan spoke about competition policy in relation to the P2P sector and in particular whether the CCCS infringement decision in 2018 would still apply after this Bill is passed.
I note that within the PHC sector, Grab currently has a market share that has been estimated at approximately 80% last year. This kind of market concentration is unhealthy and would allow the vendor to have an unusually high degree of bargaining power vis-à-vis both commuters and drivers. I understand other players are present and ramping up, such as Gojek.
Can the government provide an update on two questions.
Firstly, what is being done to interest more players, or to support local start-ups, to enter the PHC space to increase competition?
Secondly, in relation to the sale of Uber’s Southeast Asian business to Grab in 2018 which was the subject of the Competition Commission’s infringement decision, what steps will be taken to minimise the possibility of a large concentration of market share arising in future as a result of M&A deals and against sound competition policy-setting considerations?
The CCCS infringement decision stated, and I quote:
CCCS has examined internal documents of the Parties, and found that Uber would not have left the Singapore market by simply terminating its business if the Transaction had not taken place. Instead, Uber would have continued its operations in Singapore, while exploring other strategic commercial options, such as collaboration with another market player, or a sale to an alternative buyer. The Transaction has removed Grab’s closest competitor in ride-hailing platform services, namely Uber.
CCCS has received numerous complaints from both riders and drivers on the increase in effective fares and commissions by Grab post-Transaction (e.g. via a decrease in the amount and frequency of rider promotions and driver incentives).
In 2018, I filed a PQ on the matter of the relative merits of a mandatory notification regime which is practised in the EU, USA, Vietnam and the Philippines, versus Singapore’s current voluntary notification regime, which is practised in the UK, Australia and New Zealand. As part of his reply, SPS Dr Tan Wu Meng said, and I quote:
“On the other hand, under a mandatory notification regime, all merging parties that cross pre-determined notification thresholds have to notify the competition authority, regardless if there are competition issues or not. This imposes compliance costs on businesses and may impede commonplace market activities. It also requires a larger commitment on the competition authority’s resources to ensure that all mergers that cross the notification thresholds are duly notified, and to review these mergers.”
I acknowledge that this discussion touches on general competition policy rather than the P2P Bill per se.
But in the context of this Bill and in light of what happened when Uber sold its assets to Grab in 2018, I would like to ask if there will be consideration of measures to prevent a recurrence of the same outcome.
Major market-changing M&A deals do not occur all the time and huge changes in market share are not necessarily extremely difficult to determine. Compliance costs related to pre-approving major M&A deals may not be unduly high on the part of either the business sector or the regulator. A mandatory approval regime does not appear to have deterred M&A transactions in the USA and EU.
Next, the Bill gives the PTC the power to regulate and set pricing policies for ride-hail services for the first time. In this context, I would like to ask if the regulatory regime for all P2P service will continue to require there to be fixed pricing options available to commuters in addition to dynamic pricing within the PTP eco-system. Dynamic pricing efficiently matches demand and supply, going by classical economic considerations. However, notwithstanding the means-tested PWD taxi subsidy scheme, a fixed pricing option on offer within the P2P industry eco-system is still of value to lower-income persons who may have ambulatory problems. One could argue that dynamic pricing can address all needs, as those with greater price sensitivity can wait for the dynamic prices to fall. However a fixed price option provides greater assurance and peace of mind to those who really need it, even if it is associated with longer wait times.
Lastly, my colleague Mr Dennis Tan spoke about the future advent of autonomous vehicles and how this might lead to the obsolescence of the skills acquired by P2P transport drivers. Has the government given some thought to this? Will the government consider working closely with the driver community such that when autonomous vehicles are about to be phased in, drivers are notified ahead of time and given some runway and facilitation to reskill and move to a different industry if they choose to do so?